Press Release

American Equity Reports Fourth Quarter and Fiscal Year 2011 Results

WEST DES MOINES, Iowa--(BUSINESS WIRE)--Feb. 22, 2012--
American Equity Investment Life Holding Company (NYSE: AEL), a leading
underwriter of index and fixed rate annuities, today reported operating
income1 for the year 2011 of $133.7 million, or $2.12 per
diluted common share, an increase of 23% over 2010 operating income of
$108.9 million or $1.70 per diluted common share. 2011 fourth quarter
operating income was $32.6 million, or $0.52 per diluted common share,
an increase of 24% compared to 2010 fourth quarter operating income of
$26.4 million or $0.41 per diluted common share. Operating earnings for
the full year of 2011 were positively impacted by unlocking of
assumptions utilized in the determination of deferred acquisition costs
and deferred sales inducements which, as previously disclosed, increased
third quarter 2011 operating income by $12.5 million or $0.20 per
diluted common share.

Performance highlights for the fourth quarter and year of 2011 include:

Total invested assets grew 23% to $24.4 billion at December 31, 2011
compared to $19.8 billion at December 31, 2010.

Net investment income, the principal component of total revenues, grew
to $1.22 billion for the year of 2011 and $324.3 million for the
fourth quarter representing year over year growth of 18% and 17%,
respectively.

2011 annuity sales were $5.1 billion ($4.8 billion net of
coinsurance), and fourth quarter sales were $1.4 billion ($1.3 billion
net of coinsurance) representing year over year growth of 9% for 2011
and a decline of 12% for the fourth quarter.

Risk-based capital (“RBC”) ratio of 346% at December 31, 2011,
compared to 339% at December 31, 2010.

Book value per outstanding common share (excluding Accumulated Other
Comprehensive Income) of $16.09 at December 31, 2011, compared to
$15.33 at September 30, 2011.

Operating earnings return on average equity of 14.8% for the year of
2011.

Commented David J. Noble, founder and Executive Chairman of American
Equity: “When I founded American Equity in 1995 the idea of producing
over $5 billion in new annuity sales in a single year would have
exceeded my highest expectations. We are very proud of this
accomplishment. Good products, good producers and good service make for
a winning formula in any market environment, including the difficult low
interest rate, high equity market volatility environment of 2011.”

INVESTMENT SPREAD REMAINS STEADY DESPITE FALLING BOND YIELDS

American Equity earned an investment spread margin of 2.97% and 3.03%
over the cost of money on annuity liabilities for the fourth quarter and
year of 2011, respectively. Adjusted for non- recurring items, discussed
below, the investment spread was 2.98% and 3.04% for the fourth quarter
and year of 2011, respectively.

Temporary cash balances held during the fourth quarter of 2011 declined
significantly to an average of $166 million, compared to third quarter
2011 average balances of $496 million. As a result, the cost to
investment yield of such balances declined to 0.03% in the fourth
quarter compared to 0.11% in the third quarter. The cost of money
benefit from over hedging declined to 0.02% in the fourth quarter
compared to 0.05% in the third quarter.

Yields on purchases of new fixed income securities in the fourth quarter
of 2011 continued to fall to an average of 4.30% on $1.3 billion of
total purchases. For 2011 a total of $6.9 billion of new fixed income
securities were purchased with an average yield of 5.10%. Yields on new
commercial mortgage loans remained relatively attractive at 5.59%. New
loans made during the fourth quarter declined to $77 million compared to
$133 million in the third quarter. For 2011 a total of $554 million of
new commercial mortgage loans were made at an average yield of 5.73%.

Commented Wendy C. Waugaman, American Equity’s Chief Executive Officer
and President: “In 2011 American Equity more than met its goals in both
sales and earnings. We were proactive in managing rate adjustments,
which allowed us to achieve spread targets despite significant declines
in yields available to us on new investments. The result was record
operating earnings and a best-in-class return on equity.”

2012 INVESTMENT SPREAD OUTLOOK

As previously announced American Equity reduced policyholder crediting
rates on sales of new annuities as well as renewal rates on existing
annuities. These rate cuts were implemented in the fourth quarter of
2011. While new money rate cuts take effect immediately upon
implementation, renewal rate adjustments take effect on policyholder
anniversary dates over the twelve months following the implementation
date. Thus, the expected benefit from the renewal rate cuts, which is an
estimated improvement of 15-25 basis points in the cost of money on
policyholder liabilities, is reflected only to an immaterial extent in
fourth quarter 2011 spread results. 2012 spread results are expected to
reflect this benefit to an increasing degree; however, such improvements
in the cost of money may be offset by continued lower yields available
on new investments including reinvestment of proceeds from calls for
redemption of the company’s callable U.S. agency bonds. Management
believes there is sufficient capacity to further reduce policyholder
rates if necessary to enable the company to continue to meet spread
targets in 2012.

A.M. BEST AFFIRMS “A- EXCELLENT” RATING, STABLE OUTLOOK

In January 2012A.M. Best Co. (“A.M. Best”) affirmed the “A- Excellent”
financial strength ratings assigned to American Equity’s life
subsidiaries with a stable outlook. As the basis for its decision A.M.
Best cited “American Equity’s leading role in the fixed indexed annuity
marketplace, strong risk-adjusted capitalization, continued positive
trends of statutory and GAAP operating earnings and strong surrender
protection charges to mitigate potential disintermediation risk.” In
addition A.M. Best commented favorably on the company’s growth and
diverse distribution relationships.

RETIREMENT OF $46.3 MILLION OF 5.25% CONVERTIBLE SENIOR NOTES

American Equity retired $46.3 million of the remaining $74.5 million
principal amount outstanding on the company’s 5.25% Senior Convertible
Notes due 2024 on the first put date of December 15, 2011. This amount
was paid from cash and cash equivalents held at the parent company for
this purpose. The company’s $160 million line of credit remains undrawn
and fully available. The retirement of debt helped reduce the company’s
adjusted debt to capital ratio to 22.3% at December 31, 2011 compared to
25.2% at September 30, 2011.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to future operations, strategies,
financial results or other developments, and are subject to assumptions,
risks and uncertainties. Statements such as “guidance”, “expect”,
“anticipate”, “believe”, “goal”, “objective”, “target”, “may”, “should”,
“estimate”, “projects” or similar words as well as specific projections
of future results qualify as forward-looking statements. Factors that
may cause our actual results to differ materially from those
contemplated by these forward looking statements can be found in the
company’s Form 10-K filed with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date the statement was
made and the company undertakes no obligation to update such
forward-looking statements. There can be no assurance that other factors
not currently anticipated by the company will not materially and
adversely affect our results of operations. Investors are cautioned not
to place undue reliance on any forward-looking statements made by us or
on our behalf.

CONFERENCE CALL

American Equity will hold a conference call to discuss 2011 earnings on
Thursday, February 23, 2012, at 9 a.m. CST. The conference call will be
webcast live on the Internet. Investors and interested parties who wish
to listen to the call on the Internet may do so at www.american-equity.com.

The call may also be accessed by telephone at 1-866-825-1709, passcode
39670014 (international callers, please dial 1-617-213-8060). An audio
replay will be available via telephone through March 15, 2012 at
1-888-286-8010, passcode 59661466 (international callers will need to
dial 1-617-801-6888).

ABOUT AMERICAN EQUITY

American Equity Investment Life Holding Company, through its
wholly-owned operating subsidiaries, is a full service underwriter of a
broad line of fixed annuity and life insurance products, with a primary
emphasis on the sale of index and fixed rate annuities. American Equity
Investment Life Holding Company, a New York Stock Exchange Listed
company (NYSE: AEL), is headquartered in West Des Moines, Iowa. For more
information, visit www.american-equity.com.

1 In addition to net income, American Equity has consistently
utilized operating income, a non-GAAP financial measure commonly used in
the life insurance industry, as an economic measure to evaluate its
financial performance. See accompanying tables for reconciliations of
net income to operating income and descriptions of reconciling items.
See the Company’s Annual Report on Form 10-K for a more complete
discussion of the reconciling items and their impact on net income for
the periods presented. Net income was $49.7 million and $86.2 million
for the fourth quarter and full year of 2011, respectively, compared to
$9.0 million and $42.9 million for the same periods in 2010.

(a) In addition to net income, we have consistently utilized operating
income, operating income per common share and operating income per
common share - assuming dilution, non-GAAP financial measures commonly
used in the life insurance industry, as economic measures to evaluate
our financial performance. Operating income equals net income adjusted
to eliminate the impact of net realized gains and losses on investments
including net OTTI losses recognized in operations, fair value changes
in derivatives and embedded derivatives, the settlement of a class
action lawsuit and loss on extinguishment of debt. Because these items
fluctuate from quarter to quarter in a manner unrelated to core
operations, we believe measures excluding their impact are useful in
analyzing operating trends. We believe the combined presentation and
evaluation of operating income together with net income, provides
information that may enhance an investor’s understanding of our
underlying results and profitability.

(b) The year ended December 31, 2011 includes an adjustment recorded in
the first quarter of 2011 to single premium immediate annuity reserves
which reduced interest sensitive and index product benefits by $4.2
million and increased net income and operating income by $2.7 million,
increased earnings per common share and operating income per common
share by $0.05 per share and increased earnings per common share -
assuming dilution and operating income per common share - assuming
dilution by $0.04 per share.

(c) The year ended December 31, 2011 includes benefit from unlocking
which reduced amortization of deferred sales inducements by $5.0 million
and amortization of deferred policy acquisition costs by $9.1 million
and increased net income, earnings per common share and earnings per
common share - assuming dilution by $9.1 million, $0.15 per share and
$0.14 per share, respectively.

(d) The year ended December 31, 2011, includes benefit from unlocking
which reduced amortization of deferred sales inducements by $7.3 million
and amortization of deferred policy acquisition costs by $12.1 million
and increased operating income, operating income per common share and
operating income per common share - assuming dilution by $12.5 million,
$0.21 per share and $0.20 per share, respectively.